1. A local citizen gives a not-for-profit organization a cash donation that is restricted for research activities. The money should be recorded in
a. Unrestricted Net Assets.
b. Temporarily Restricted Net Assets.
c. Permanently Restricted Net Assets.
d. Deferred Revenue.

2. Theresa Johnson does volunteer work for a local not-for-profit organization as a community service.
She replaces without charge an administrator who would have otherwise been paid $31,000. Which of the following statements is true?
a. The organization should recognize a restricted gain of $31,000.
b. The organization should recognize a contribution of $31,000 as an increase in unrestricted net assets as well as salary expense of $31,000.
c. The organization should recognize a reduction in expenses of $31,000.
d. The organization should make no entry.

3. Which of these forms must most not-for-profit organizations file annually with the Internal Revenue Service?
a. 990.
b. 1203.
c. 501.
d. 501(c)(3).

4. Belwood University is a private not-for-profit school that has tax-exempt status. Which of the following is most likely to be the type of tax-exempt status that Belwood holds?
a. 501(c)(3)
b. 501(c)(4)
c. 501(c)(5)
d. 501(c)(6)

5. An organization of high school seniors performs volunteer services for patients at a nearby nursing home. The nursing home would not otherwise provide these services, such as wheeling patients in the park and reading to them. At the minimum wage rate, these services would amount to $21,320, but their actual value is estimated to be $27,400. In the nursing home’s statement of revenues and expenses, what amount should be reported as public support?
a. $27,400.
b. $21,320.
c. $6,080.
d. $–0–.

6. A voluntary health and welfare organization receives a gift of new furniture having a fair value of $2,100. The group then gives the furniture to needy families following a flood. How should the organization record receipt and distribution of this donation?
a. Make no entry.
b. Record a contribution of $2,100 and community assistance expense of $2,100.
c. Recognize revenue of $2,100.
d. Recognize revenue of $2,100 and community expenditures of $2,100.

7. George H. Ruth takes a leave of absence from his job to work full-time for a voluntary health and welfare organization for six months. Ruth fills the position of finance director, a position that normally pays $88,000 per year. Ruth accepts no remuneration for his work. How should these donated services be recorded?
a. As contribution revenue of $44,000 and an expense of $44,000.
b. As earned revenue of $44,000.
c. As an expense of $44,000.
d. They should not be recorded.

8. A voluntary health and welfare organization produces a statement of functional expenses. What is the purpose of this statement?
a. Separates current unrestricted and current restricted funds.
b. Separates program service expenses from supporting service expenses.
c. Separates cash expenses from noncash expenses.
d. Separates fixed expenses from variable expenses.

9. A voluntary health and welfare organization has the following expenditures:
Research to cure disease . . . . . . . . . . . . . . . . . . . . . $60,000
Fund-raising costs . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
Work to help disabled . . . . . . . . . . . . . . . . . . . . . . . 40,000
Administrative salaries . . . . . . . . . . . . . . . . . . . . . . . 90,000
How should the organization report these items?
a. Program service expenses of $100,000 and supporting service expenses of $160,000.
b. Program service expenses of $160,000 and supporting service expenses of $100,000.
c. Program service expenses of $170,000 and supporting service expenses of $90,000.
d. Program service expenses of $190,000 and supporting service expenses of $70,000.

10. A voluntary health and welfare organization sends a mailing to all of its members including those who have donated in the past and others who have not donated. The mailing, which cost $22,000, asks for monetary contributions to help achieve the organization’s mission. In addition, 80 percent of the material included in the mailing is educational in nature, providing data about the organization’s goals. Which of the following is true?
a. Some part of the $22,000 should be reported as a program service cost because of the educational materials included.
b. No part of the $22,000 should be reported as a program service cost because there is no specific call to action.
c. No part of the $22,000 should be reported as a program service cost because the mailing was sent to both previous donors and individuals who have not made donations.
d. Some part of the $22,000 should be reported as a program service cost because more than 50 percent of the material was educational in nature.

11. A voluntary health and welfare organization receives $32,000 in cash from solicitations made in the local community. The organization receives an additional $1,500 from members in payment of annual dues. Members are assumed to receive benefits roughly equal in value to the amount of dues paid. How should this money be recorded?
a. Revenues of $33,500.
b. Public support of $33,500.
c. Public support of $32,000 and a $1,500 increase in the fund balance.
d. Public support of $32,000 and revenue of $1,500.